CPD: Upcoming budget must prioritize health, social security

The Center for Policy Dialogue (CPD) on Thursday called for more emphasis on health, social security, agriculture, and education in the upcoming national budget for the fiscal year 2021-22.

The target for revenue collection in the upcoming budget should be realistic, it also said.

The leading think tank made the observation at a virtual media briefing titled "CPD’s Recommendations for the National Budget FY2021-22," where it recommended the urgency of improving the implementation of the capacity of the relevant ministries and departments related to the health sector, which cannot be overemphasized.

Exemption of import duties and taxes related to healthcare services, introduced in the FY21 budget, should continue in the next fiscal. Medicines for Covid-19 treatments, which have to be imported, should also be tax-free, the think tank recommended.

In the budget for the next financial year, the CPD also proposed to raise the maximum tax rate to 30%, which is now 25%. Besides, it proposed to expand the budget for the next financial year.

Presenting the keynote paper, Towfiqul Islam Khan, senior research fellow of CPD, reiterated that the upcoming budget would also have to allocate resources in a way that would address the needs of both the immediate and the recovery phase. In the immediate term, it will need to focus on health risk mitigation and ensuring food security through expanded safety nets.

As Bangladesh is reporting a spike in coronavirus cases in the last few days, people are seen waiting in long lines to test for Covid-19. The photo was taken from Mugda General Hospital on Sunday, March 21, 2021 | Mehedi Hasan/Dhaka Tribune

He also said that the government’s forecast that the country’s economy would grow by 7.40% in the current fiscal year FY21 was "a highly enthusiastic prediction."

In addition, he mentioned that it would not be right to keep the opportunity to legalize undisclosed money.

"I propose to cancel this facility from next financial year, because this facility is completely in conflict with the tax structure."

Instead, he called on the government to bring those who have taken tax identification numbers (TIN) under the tax net.

Higher allocation for social protection in the FY22 budget is critically important. The budget for FY22 should allocate adequate resources for digital support and technologies for continuing education at educational institutions across the country.

Experts address a virtual pre-budget discussion  organized by the Centre for Policy Dialogue (CPD) on Thursday, April 29, 2021

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They also demanded to give importance to three issues in budget allocation - re-adjustment, recovery, and reform.

The CPD notes that the use of the Internet in enterprise and education has increased during the pandemic period. In view of the epidemic, it recommended to withdraw 15% supplementary duty and 1% surcharge on internet services.

Those in the health sector who are on the frontline have not yet received incentive money. Incentives have been urged to be released as soon as possible to encourage them.

Regarding the government's economic growth projection, Fahmida Khatun, executive director of CPD, underscored that the ongoing pandemic is not an ideal time to discuss what the country's gross domestic product (GDP) will be by the end of the year.

Rather it was time to handle the pandemic, which is seeing a rapid surge of infection rates, she also said.

Prof Mustafizur Rahman, distinguished fellow of CPD, said: "We need to focus on small projects where there are more job opportunities in the next financial year than big projects."

It would not be right to provide the opportunity to launder black money, as many people are unfairly taking opportunity without paying taxes, he also said.

The poor should be given cash, if possible more than once a year. This will meet their needs as well as the domestic market, he added.

CPD Research Director Khandaker Golam Moazzem said social security programs should be allocated in the next budget keeping in mind the new poor, returnees, and the marginalized.

He also proposed to focus on foreign funding to meet the budget deficit also suggested preparing for the use of foreign money and overcoming the weaknesses that exist.

The CPD recommended incentives for health workers, purchase of rice directly from farmers, incentives for the use of solar power in agriculture, an extension of incentives for SMEs to three years, waiver for minors, as well as VAT exemption for small traders.

They also proposed to give big benefits to those who are small in the export sector, to give cash incentives to those who are making non-cotton garments, and to give tax benefits on the use of renewable energy in the industrial sector.